Poverty transitions: evidence for income and multidimensional indicators

Abstract

This paper presents empirical results of transitions of poverty measures for Chile, using the 1996 – 2001 – 2006 National Socioeconomic Panel Survey data. We compare the differences between poverty dynamics using the income method and the multidimensional approach. Also, we identify determinants associated with changes in the state of poverty. Over this period, Chile experienced significant reductions in both income and multidimensional poverty. We found that the percentage of people moving out of poverty using the income measure is higher than the percentage of people out of poverty when measured multi-dimensionally. The paper suggests that there are differences between the measures of multidimensional poverty and multidimensional poverty transitions variy considerably according to this. Transition matrices show that the percentage of people moving out of poverty using the income measure is higher than the percentage of people out of poverty when measured multi-dimensionally. The importance of education as a determinant of exiting poverty is clear in all measures, while the number of persons working at home is important only when considering the income measure only.